As unbelievable as it may sound, Australia currently holds the title for world’s worst performing tourist market. And pedalling out a procession of celebrities like Russell Crowe and the Wiggles at the G’day Australia campaign in LA is just a bandaid solution — the real problem doesn’t come down to PR, it’s the iron grip that the Qantas/United Airlines duopoly has on the US/Australia air route.

The protection of Qantas is resulting in Australia’s international tourist numbers falling drastically as tourism numbers rise everywhere else around the world.

According to the World Tourism Organisation, in 2006, despite being ranked the world’s most desired place to travel by numerous studies, and strong international tourist growth worldwide, Australia’s tourism numbers have actually gone backwards.

Even the Middle East tourist market with the war between Hezbollah and Israel out performed the Australia in tourism growth. Take a glance at the World Tourism Organization’s (UNWTO) latest world tourism barometer:

In 1986 Central/East Europe held the title for world’s worst performing tourist market as a result on the Chernobyl nuclear disaster. In 1991 the Middle East was the world’s worst performing tourist market after Iraq invaded Kuwait. So what’s Australia’s excuse? To capture the title, Australia relied on a government-made disaster of failed economic and competition policy.

As the rest of the world opened their skies to competition and new start-up airlines were given equal opportunity, the competitive pressures of free markets reduced airfares for international tourists worldwide.

But the government’s decision to resort to the failed polices of protectionism means that our tourism industry – our single biggest export earner and an industry which over half a million Australians rely on for their income – is being sabotaged for the sake of protecting Qantas.

Tourists are bypassing Australia in favour of Hawaii, South East Asia, Europe and the Caribbean, all locations that that opened their skies to competition.

Australia needs to learn from the Canadian example. In 1995 Canada entered in a bilateral “Open Skies” agreement with the United States. This agreement authorised any Canadian or U.S. airline to offer trans-border services without restriction in terms of fares, flight frequencies or aircraft types.

In contrast Australia has kept a protected market, as Qantas (seeking to maintain its privileged and protected position) have successfully lobbied the government to reject arguments about opening up the Australia/USA air route to competition. Today the direct Australia/USA air route is a protected duopoly between Qantas and United Airlines.

The direct of result of opening the USA/Canada air market to unrestricted competition resulted in capacity of scheduled airline services between the two countries experiencing strong growth starting with a sharp increase of 25% in the first year alone. In the period 1991-2001 growth in air travel and tourism between USA and Canada was 70% before recession, the terrorist attacks in New York and the SARS crisis.

Australians believed that winning the right to host the 2000 Sydney lead to a greater number of tourist arrivals, but Canada opening their skies to competition has had ten times the positive benefits that the Olympics had for Australia.

For the Australian government to argue that Australia must wait until some time in 2008 for Virgin Blue to start to service to the USA is a sad case of too little and too late.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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